NEW YORK (Reuters) - AIG and former chief executive Maurice "Hank" Greenberg have reached an agreement to bury a long-standing, bitter legal battle and the insurer will turn over materials the former boss can use to write a memoir, as well as photographs and a Persian carpet.

The settlement is a feather in the cap of AIG Chief Executive Robert Benmosche, as it frees up the company's resources to deal with the more pressing matter of repaying taxpayers, which gave the company a US$180 billion (S$249.07 billion) bailout to save it from collapse under soured mortgage bets last year.

"The resolution of these long-running disputes will remove a significant distraction and expense and allow AIG to better focus its efforts on paying back taxpayers and restoring the value of our franchise for the benefit of all our stakeholders," Benmosche said in a statement.

Benmosche, who became CEO in August, first reached out to Greenberg when he was considering taking the job, leading to the parties to agree to work together to try to reach a settlement.

Greenberg was forced to leave the insurer in 2005 after 38 years amid an investigation of business practices at AIG conducted by then New York attorney general Eliot Spitzer.

"I look forward to assisting AIG in trying to preserve and restore as much value as possible for all of AIG's stakeholders," said Greenberg, in a statement on Wednesday.

American International Group Inc announced details of the settlement in a regulatory filing late on Wednesday. The parties agreed to release each other from all claims and AIG will reimburse Greenberg and other parties for "reasonable" legal expenses up to US$150 million.

The pact also covers companies Greenberg controls - C.V. Starr and Starr International - and AIG's former chief financial officer, Howard Smith.

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